Leading Wall Street analysts see promising growth potential in these three stocks

The new year is just beginning, yet macroeconomic uncertainty is already looming over investors, as Federal Reserve officials express concerns about inflation and its effect on the path of interest rate cuts.

 

During uncertain times like these, investors can boost their portfolio returns by including stocks with strong financial foundations and long-term growth prospects. The investment strategies of top Wall Street analysts can guide investors in selecting the right stocks, as these professionals rely on a deep understanding of the macroeconomic conditions and specific company factors for their analysis.

 

Here are three stocks preferred by the top analysts in the field, according to TipRanks, a platform that evaluates analysts based on their performance.

 

We'll begin with Uber Technologies (UBER), a company known for its ride-sharing and food delivery services. Uber exceeded expectations with its revenue and earnings for the third quarter of 2024, although its gross bookings were below expectations.

 

Recently, Mizuho analyst James Lee reaffirmed a buy rating on Uber Technologies shares with a price target of $90. Lee views 2025 as a year of investment for Uber. Although these investments could affect the company's earnings before interest, taxes, depreciation, and amortization in the short term, they are anticipated to drive long-term growth.

 

Based on his analysis, Lee expects Uber's growth investments to lead to a compound annual growth rate of 16% in core gross bookings from FY23 to FY26, aligning with the company's target of mid- to high-teens growth projected during their analyst day. Lee is confident that Uber's EBITDA growth is on track with the forecasted high-30s to 40% compound annual growth rate set during the analyst day. "Despite focusing on growth investments, economies of scale and enhanced efficiency should mitigate margin risks," said Lee.

 

Additionally, Lee believes that concerns about the growth of Uber's Mobility business are exaggerated. He anticipates high-teens gross bookings growth (in forex-neutral terms) in FY25, with the rate of deceleration slowing compared to the latter half of 2024.

 

Moreover, Lee projects that gross bookings for Uber's Delivery segment will remain in the mid-teens in FY25. This increase is expected to be driven by the rising adoption of new verticals while maintaining its market share in food delivery. The analyst also noted that Mizuho's research indicates order frequency has reached a new all-time high. The research further shows robust adoption of grocery delivery in the U.S., Canada, and Mexico, along with strong user penetration.

 

Lee is ranked No. 324 among over 9,200 analysts tracked by TipRanks. His ratings have been successful 60% of the time, providing an average return of 12.9%. View Uber Technologies Stock Charts on TipRanks.

 

Next, we examine Datadog (DDOG), a company that offers cloud monitoring and security solutions. In November, Datadog reported results for the third quarter of 2024 that exceeded expectations.

 

On January 6, Monness analyst Brian White reiterated a buy rating on Datadog stock with a price target of $155. White believes the company has a balanced approach toward the trend of generative artificial intelligence, "avoiding the exaggerated claims made by many in the software industry." He noted that Datadog performed well compared to its peers in a difficult software landscape in 2024, but acknowledged it lagged behind other stocks in Monness' coverage.

 

Nevertheless, White anticipates that both Datadog and the broader industry will begin to experience incremental growth over the next 12 to 18 months due to the long-term boom in generative AI. Highlighting Datadog's strong performance compared to peers and its transparency regarding its progress in generative AI, White pointed out that AI-native customers comprised more than 6% of the company's annual recurring revenue (ARR) in Q3 2024, an increase from over 4% in Q2 2024 and 2.5% in Q3 2023.

 

White also highlighted some of Datadog's AI offerings, such as LLM Observability and its generative AI assistant, Bits AI. Overall, the analyst is optimistic about Datadog and believes the stock warrants a premium valuation compared to traditional software vendors due to its cloud-native platform, rapid growth, and significant secular trends in the observability field, as well as its new growth opportunities driven by generative AI.

 

White is ranked No. 33 among over 9,200 analysts tracked by TipRanks. His ratings have been successful 69% of the time, yielding an average return of 20%. View Datadog Ownership Structure on TipRanks.

 

Our third stock pick this week is Nvidia (NVDA), a semiconductor powerhouse. The company is regarded as one of the primary beneficiaries of the generative AI surge and is witnessing strong demand for its advanced GPUs (graphics processing units), critical for building and running AI models.

 

Following a fireside chat with Nvidia's CFO, Colette Kress, JPMorgan analyst Harlan Sur reaffirmed his buy rating on Nvidia stock with a price target of $170. Sur emphasized the CFO's confidence in maintaining the production ramp-up of the company's Blackwell platform despite supply chain challenges, thanks to effective execution.

 

Additionally, the company anticipates continued strong spending in the data center space throughout 2025, bolstered by the Blackwell ramp-up and widespread demand. Sur noted that management envisions significant revenue growth opportunities as the company captures a larger portion of the $1 trillion-worth data center infrastructure installed base.

 

Sur added that Nvidia expects to capitalize on the shift to accelerated computing and the growing demand for AI solutions. Management believes the company holds a competitive edge over ASIC (application-specific integrated circuit) solutions due to several advantages, including ease of adoption and comprehensive system solutions.

 

Agreeing with this perspective, Sur stated, "We believe that enterprise, vertical markets, and government customers will continue to favor Nvidia-based solutions."

 

Among other key insights, Sur highlighted the launch of next-generation gaming products and opportunities to expand beyond high-end gaming into markets such as AI PCs.

 

Sur is ranked No. 35 among over 9,200 analysts tracked by TipRanks. His ratings have been successful 67% of the time, providing an average return of 26.9%. View Nvidia Hedge Funds Activity on TipRanks.